Saturday, August 13, 2022
HomeBusinessShares Dip as New Covid Variant Rattles Airline Investors

Shares Dip as New Covid Variant Rattles Airline Investors

Following the discovery of a new Covid version, shares in British Airways owner IAG and EasyJet have fallen as a result of a restriction on flights from various African nations.

In early trade, IAG’s stock sank 15%, while EasyJet’s slumped 14%.

Flights from six southern African nations will be temporarily halted from midday on Friday, the administration stated last night.

Fears that the new Covid strain would stymie economic recovery caused stock markets throughout the world to plummet.

The FTSE 100 index in London lost 2.7 percent, while key stock market indices in Germany and France also dropped more than 3%. It came after overnight stock market falls in Japan and Hong Kong.

South African, Namibian, Zimbabwean, Botswana, Lesotho, and Eswatini flights into the UK will be barred from midday until 04:00 GMT on Sunday.

The UK’s travel warning list has been updated to include all six counties. It implies that everyone traveling from the UK or Ireland after 04:00 on Sunday would be required to quarantine in a hotel, while anyone arriving before then will be urged to isolate at home.

“We’ll be contacting affected customers with flight information,” BA added.

It also advised customers to keep an eye on the latest travel advice from the UK government as well as the BA website.

Whizz Air’s stock sank by more than 10%, while Rolls-Royce, a British engineering company that builds plane engines, had its stock drop by 13%.

Travel businesses such as Carnival Cruise Lines and Tui were among those affected by the sell-offs.

“Fear has gripped the financial markets, sending the travel sector into yet another severe storm,” said Susannah Streeter, Hargreaves Lansdown’s senior investing and markets analyst.

“With Europe currently fighting a fourth wave of the virus, there are now worries that the highly mutated Covid strain identified in Southern African states would cause further shutdowns throughout the world in an attempt to halt its spread, adding to the recovery time.”

Flights from the six southern African countries have been prohibited by a number of other countries, including Germany, Italy, and Israel.

Other EU states should “engage the emergency brake” to prohibit travel from certain countries, according to European Commission President Ursula von der Leyen.

Oil prices have also fallen as a result of concerns that the new Covid strain may result in limitations and a reduction in demand. Brent crude fell 4.9 percent to $78.15 a barrel on Friday.

“The market’s way of expressing it’s worried about a slowdown in economic activity is the drop in oil price,” said Russ Mould, investment director at AJ Bell.

“On the flip side of declining commodity prices, a weaker oil price should bring some respite in terms of inflationary pressures,” he added.

“This might make central banks more hesitant to raise rates in the near future, but it depends on whether the new Covid strain causes considerable disruption or can be managed as quickly as feasible.”

Scientists were “very worried” about the new Covid version, according to UK Health Secretary Sajid Javid, but more needed to be studied about it.

He did say, though, that the variation featured a large number of changes, “maybe twice as many as we’ve observed in the Delta variant.”

Mr Javid explained that putting the six nations on the red list was about “being careful, taking action, and attempting to secure our borders as best we can.”

Between midday on Friday and early Sunday morning, Virgin Atlantic flights from Johannesburg to London Heathrow will be canceled, according to the airline.

“We’re presently examining our South Africa operating schedule for the following week,” the statement continued.

Customers who have booked flights to or from South Africa with Virgin Atlantic should check the company’s website, according to the airline. They should contact third parties or agencies if they have made reservations through them.

Bob Carlson
Bob Carlson
Bob Carlson is a business journalist, with over a decade of experience in the trenches of reporting up-to-date business news for publications all over the world. With a wealth of knowledge at his back, Bob strives to bring the most important insights into the business world for TheOptic daily.
RELATED ARTICLES
- Advertisment -
Google search engine

Most Popular

Recent Comments